SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 2003
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Primecore Mortgage Trust, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 0-30507 94-3324992
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(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number) Identification No.)
99 El Camino Real, Menlo Park, CA 94025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 328-3060
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events and Regulation FD Disclosure.
On February 13, 2003, our Board of Directors met to decide on the stock
redemption policy. At the meeting, the Board voted unanimously to adopt the
Primecore Mortgage Trust, Inc. Redemption Policy--Effective February 12, 2003,
as the current stock redemption/repurchase policy of the Company. Set forth in
its entirety as follows is the Primecore Mortgage Trust, Inc. Redemption
Policy--Effective February 12, 2003:
Primecore Mortgage Trust, Inc. Redemption Policy--Effective February 12, 2003
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Effective as of February 12, 2003, the following is the policy adopted by the
Board of Directors of Primecore Mortgage Trust, Inc. (the "Company") with
respect to requests made by shareholders for the repurchase of shares by the
Company.
General Principles
The Board of Directors seeks to implement a policy for the repurchase of stock
by the Company that is prudent and fair, and which is consistent with the best
interests of the Company and the law.
The Board of Directors is committed to implementing a stock repurchase policy
that attempts to provide shareholders with liquidity, while not depriving the
Company of funds for the ongoing conduct of the Company's business in the best
interests of all shareholders, with the understanding that shareholders do not
have any vested right to require the Company to repurchase shares. The policy
must be and is subject to modification or termination by the Board of Directors,
in its full discretion, when deemed to be in the best interests of the Company.
Since the business of the Company is to invest funds in real estate construction
loans, and the Company makes commitments to fund loans based on capital
expectancies, repurchase of shares is always subject to the availability of
funds designated by the Board of Directors for repurchase. The Company may not
be able to honor repurchase requests within the time that a shareholder may
desire. The Company will not sell or otherwise liquidate any portion of its loan
portfolio to fund a repurchase request.
Repurchase Plan
Cash Available for Redemption
The Company will make available for stock repurchases 25% of the "free cash
flow" that exists in any given Repurchase Period (as defined below). "Free cash
flow" will be determined by totaling all proceeds from repayments of loans and
all net proceeds from the sale of real-estate-owned properties in the Company's
portfolio during a Repurchase Period (as defined below), and then subtracting
from such total amounts due during the same period for (i) existing loan
commitments, (ii) debt payments to third parties, (iii) dividend or other
distributions to shareholders, and (iv) operating expenses.
Repurchase Periods
The periods between October 1 and March 31 of the following year, and April 1
and September 30 shall each be a "Repurchase Period" for the purposes of
calculating "free cash flow," except that the first Repurchase Period under this
policy shall run from January 1, 2003 through March 31, 2003.
Frequency of Repurchases
Repurchase requests will generally be acted upon twice per year, typically on or
around the last day of May and the last day of November of each year (each a
"Repurchase Date"), provided, however, that no Repurchase Date shall be
sooner than the fifteenth day following the filing with the Securities Exchange
Commission of the relevant Form 10-Q establishing the Repurchase Price (as
defined below) for a Repurchase Date so that a shareholder can make a
determination as to whether to proceed with or cancel a repurchase request, and
further provided that it shall be the sole responsibility of each shareholder
submitting a repurchase request to ascertain the Repurchase Price, and make an
independent determination as to whether to cancel a repurchase request before it
has been acted upon by the Company. The Company will provide shareholders with
a request and election form that shall be used in connection with any repurchase
requests.
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Repurchase Price
Repurchases, except in the case of "Early Payout Priority Requests" (as defined
below) will be at the per share fair market value, as determined by our Board of
Directors (the "Repurchase Price"). The Repurchase Price shall be disclosed in
the Company's most recent Form 10-Q filing made prior to a Repurchase Date and
filed with the Securities and Exchange Commission, and shall be determined by
(i) making an assessment of the realizable value of assets in the Company's
portfolio, (ii) subtracting therefrom the total liabilities of the Company, and
(iii) dividing such number by the total number of shares outstanding.
Priority of Repurchases
General Repurchase Request
A request for repurchase at the Repurchase Price shall constitute a "General
Repurchase Request." A General Repurchase Request shall be honored from funds
available in a Repurchase Period generally in the order that the Company
received a written General Repurchase Request, except with respect to any
Limited Payout Request (as defined below). With respect to shareholders who made
a General Repurchase Request prior to February 12, 2003, such shareholders will
retain their relative position should they elect to retain their General
Repurchase Request. In the event that the Company received or receives multiple
General Repurchase Requests on any given day, all such requests may be treated
on a prorata basis.
Limited Payout Request
For any shareholder making a General Repurchase Request that is limited to 10%
or less of the total shares held by such shareholder at the time of the request
(a "Limited Payout Request"), such request shall be given priority to funds
available in any Repurchase Period over any other General Repurchase Request,
provided that a Limited Payout Request may not exist concurrently with a General
Repurchase Request, and once a Limited Payout Request has been honored, the
shareholder whose shares have been repurchased may not make any new request for
repurchase for a period of twelve months from the last date of repurchase. A
Limited Payout Request shall be honored from funds available in a Repurchase
Period generally in the order that the Company received the written Limited
Payout Request. With respect to shareholders who made a General Repurchase
Request prior to February 12, 2003, such shareholders may elect to convert such
General Repurchase Request to a Limited Payout Request by providing written
notice of such election to the Company on or before May 23, 2003. For any such
shareholders who timely elect to convert their General Repurchase Request to a
Limited Payout Request, relative priority shall be determined based on the
relative order of the shareholder's pre-February 12, 2003 General Repurchase
Request. For any shareholders who elect, after May 23, 2003, to convert a
pre-February 12, 2003 repurchase request to a Limited Payout Request, the
request will be treated as a new Limited Payout Request made as of the date the
written request and election form is received by the Company. In the event that
the Company receives multiple Limited Payout Requests on any given day, all such
requests may be treated on a prorata basis.
Early Payout Priority Request
Some shareholders may have an emergency need for liquidation, or may not wish to
await repurchase in the normal course. Accordingly, for any shareholders who
seek to prioritize their repurchase requests, such shareholders may do so by
making an "Early Payout Priority Request." An Early Payout Priority Request
shall have first priority to available funds over any General Repurchase Request
and any Limited Payout Request.
Shareholders making an "Early Payout Priority Request" agree to accept a 30%
priority withdrawal discount (the "Early Payout Discount") off of the Repurchase
Price for the shares repurchased, and shall have a priority to the cash
available for repurchase purposes. By way of example only, if the Repurchase
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Price were calculated at $8.00 per share, a shareholder making an Early Payout
Priority Request would receive $5.60 per share in return for prioritization of
the shareholder's request for repurchase.
Shareholders may include all or part of their shares in an "Early Payout
Priority Request," and submission of an "Early Payout Priority Request" for only
a part of a shareholder's shares will not preclude the shareholder from making a
concurrent or subsequent General Repurchase Request with respect to all or part
of the balance of the shares. Early Payout Priority Requests shall be honored
from funds available for repurchase in the order that the Company received the
Early Payout Priority Request. With respect to shareholders who made a General
Repurchase Request prior to February 12, 2003, such shareholders may elect to
convert such General Repurchase Request to an Early Payout Priority Request by
providing written notice of such election on or before May 23, 2003. For any
such shareholders who timely elect to convert their General Repurchase Request
to an Early Payout Priority Request, relative priority shall be determined based
on the relative order of the shareholder's pre-February 12, 2003 General
Repurchase Request. For any shareholders who elect, after May 23, 2003, to
convert a pre-February 12, 2003 repurchase request to an Early Payout Priority
Request, the request will be treated as a new Early Payout Priority Request made
as of the date the written request and election form is received by the Company.
In the event that the Company receives multiple Early Payout Priority Requests
on any given day, all such requests may be treated on a prorata basis.
Holding Period
Any shares of stock purchased after February 12, 2003 shall be subject to a
minimum holding period of three years from the date of purchase before the
shares are subject to a General Repurchase Request or a Limited Payout Request.
Such shares can, at any time, be the subject of an Early Payout Priority
Request. Shares purchased prior to February 12, 2003, and any shares acquired
through the Company's dividend reinvestment program ("DRIP") are not subject to
any holding period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 18, 2003 Primecore Mortgage Trust, Inc.
By: /s/ MICHAEL RIDER
Michael Rider, Chief Financial Officer
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